Methods for RNA functionalization at specific sites are in high demand but remain a challenge, particularly for RNAs produced by transcription rather than by total synthesis. Recent studies have described acylimidazole reagents that react in high yields at 2'-OH groups stochastically at nonbase-paired regions, covering much of the RNA in scattered acyl esters. Localized reactions, if possible, could prove useful in many applications, providing functional handles at specific sites and sequences of the biopolymer. Here, we describe a DNA-directed strategy for in vitro functionalization of RNA at site-localized 2'-OH groups. The method, RNA Acylation at Induced Loops (RAIL), utilizes complementary helper DNA oligonucleotides that expose gaps or loops at selected positions while protecting the remainder in DNA-RNA duplexes. Reaction with an acylimidazole reagent is then carried out, providing high yields of 2'-OH conjugation at predetermined sites. Experiments reveal optimal helper oligodeoxynucleotide designs and conditions for the reaction, and tests of the approach are carried out to control localized ribozyme activities and to label RNAs with dual-color fluorescent dyes. The RAIL approach offers a simple and novel strategy for site-selective labeling and control of RNAs, potentially of any length and origin.